Sands’ Sale of Macau Property May Raise $12 Billion

Sheldon Adelson, chairman of  Las Vegas Sands Corp.
Chairman of US-based firm Sands Las Vegas as well as Sands China, Sheldon Adelson, visits the Hong Kong Stock Exchange (HKSE) in Hong Kong, on Nov. 30, 2009. Ed Jones/AFP/Getty Images

Las Vegas Sands Corp. Chairman Sheldon Adelson said the planned sale of the casino operator’s Macau malls and apartments may raise as much as $12 billion and recoup their construction costs.

“It will be like $12 billion if we add up all the apartments and all the retail in Macau,” including those in buildings still under construction, Adelson, the founder and chief executive officer of Las Vegas Sands, said in an interview in Singapore yesterday. The company may start selling the Macau assets within 2 1/2 years, he said.

Sands, which Adelson describes as “an Asian company with a presence in Las Vegas and the U.S.,” gets 73 percent of its revenue from Macau, the world’s largest gambling market. He was in Singapore yesterday to open the first phase of Marina Bay Sands, the city-state’s second casino, and raised his earnings forecast for the resort, saying the $5.5 billion invested in it will be recouped in five years.

Sands’ casino resort yesterday opened 963 of its 2,560 hotel rooms, the casino, the meeting and convention facilities, parts of its shopping mall and some restaurants. A grand opening party will be held June 23 when the second phase is unveiled, including a sky park, additional shops and more restaurants.

Asia will contribute 85 percent of revenue once the Singapore casino “ramps up,” said Adelson. Last year’s sales totaled $4.56 billion, with 27 percent coming from Las Vegas, where the company is based.

Asset Sales

Macau assets Sands may sell include the Four Seasons apartments and shopping areas in the Venetian Macau casino resort and in the Four Seasons hotel, Adelson said. The plan also includes selling condominiums at the St. Regis, where construction is resuming.

“That is our fundamental business model -- we get our money back from the sale of non-core business assets,” he said.

Still, Jonathan Galaviz, an independent strategist who follows travel and leisure in Asia, said apartments and malls in Macau may be a tough sell to investors, given that the city isn’t a proven place for housing investment, and that a huge asset bubble may be developing in Asian real estate.

“Second-home buyers in Asia tend to have an affinity for beach and costal destinations, so Macau’s proposition will need to be unique in order to compete,’” Galaviz said in an e-mail. As for malls, “the average length of stay for Macau’s average tourist -- around one night -- doesn’t yet lend itself to a strong and dynamic retail opportunity.”

Sands Shares

Sands fell $1.51, or 5.8 percent, to close at $24.69 on the New York Stock Exchange composite trading. The stock has gained 65 percent this year. Sands China Ltd., the company’s Hong Kong- listed unit, fell 3.6 percent to close at HK$12.30 in Hong Kong trading.

Adelson, who is Sands’ controlling shareholder, said in December that selling the retail areas at the Four Seasons and the Venetian would raise enough money to pay Sands’ debt. The company has $12.2 billion of bonds and loans due from next year to 2015, according to data compiled by Bloomberg.

The billionaire, who previously said the Singapore project would add more than $1 billion in annual earnings before interest, tax, depreciation and amortization, didn’t provide a new figure apart from saying he was raising his forecast. The return period compares with four years for the Macau project, which cost about half as much to build, Adelson said.

‘Grand Slam’

The Marina Bay Sands in Singapore will be a “grand slam home run,” Adelson said. “Asian people just love to gamble.”

Singapore aims to lure 17 million visitors and triple annual tourism revenue to S$30 billion ($22 billion) by 2015, helped by two casino resorts, Marina Bay Sands and Genting Bhd.’s Resorts World Sentosa.

“We are very bullish on Singapore, and believe revenues will exceed the consensus expectations given the desire for Asians to gamble,” Aaron Fischer, head of Asian consumer and gaming research at CLSA Asia Pacific Markets, said in an e-mail. There are “high net incomes in Singapore and Southeast Asia, plus easy access for gaming for the city’s 5 million people.”

Still, Fischer said he expects the Macau asset sales to raise closer to $2 billion than $12 billion, and that the retail market will have to pick up before Sands’ management gets offers for the malls that meet its expectations.

The $4.7 billion development on Singapore’s Sentosa Island, which opened its casino Feb. 14, is operated by Genting Singapore Plc, controlled by Malaysia’s Genting. The Sentosa project also includes a Universal Studios theme park.

Marina Bay

The Marina Bay Sands casino, which makes up about 3 percent of the 15,000 square-meter (161,000-square-foot) resort, has about 600 table games and more than 1,500 slot machines.

The casino’s table games include baccarat, with a minimum bet of S$50 and maximum bet of S$50,000. A black Lotus sports car sits atop a platform in the middle of a circle of slot machines.

Asia has room for five to 10 cities like Las Vegas, Adelson said. The most likely countries to approve casinos in the region are Japan and Taiwan, he said.

Marina Bay Sands, built beside Singapore’s financial district, was scheduled to open at the end of last year. The resort includes three 55-floor hotel towers of rooms and suites topped with the sky park, a structure shaped like a ship.

Singapore announced in April 2005 it would allow casinos, overturning a ban in place since independence in 1965. Marina Bay Sands and Resorts World Sentosa are the only two casino developments that have been awarded licenses.

Genting Singapore fell 0.6 percent to close at 86.5 Singapore cents. The stock has lost 33 percent this year after tripling last year. Genting Bhd. declined 1.9 percent to 6.60 ringgit in Kuala Lumpur.

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